The business model of the emerging competition, particularly in Asia, is to accelerate the move to commodity status, establish a majority percentage of share and then harvest. That's a very viable strategy. However, you have to be able to meet your customers' needs beyond that. Solid surface and engineered stone require more support than a typical commodity requires, so I don't see it ever becoming a "true" commodity.
SSM: Where does quartz surfacing fit in the commercial side of the industry?
Owens: Engineered stone is accelerating on the commercial side just as it is on the residential side. If you think about it, hard and shiny products, such as stone, were a mainstay in commercial long before their popularity in residential. So our commercial customers are looking for a functional response to an unmet need, as well as the aesthetic response. Engineered stone meets both of those requirements.
SSM: What advice can you offer fabricators wanting to get more into commercial work?
Owens: First of all, a fabricator needs to know what his or her sources of competitive advantages are. What are the things your company does really well that helps you win? There are usually just two or three strengths. You have to determine if what you are good at is leverageable in the commercial market space and then to find a niche to compete in. Fabricators should focus in on one or two of those areas of commercial and become the go-to company for that space, rather than try to be all things to all opportunities.
Second, you must have a plan. It will help you move more aggressively in the commercial area, while maintaining your business solvency without exposing your core business. You need to make sure you don't lose your liquidity. Cash flow is king for most mid-sized to small companies, and it's even more so when you are in construction.
Third, if at all possible, you should hire a person or people who have experience in the commercial construction industry — not necessarily in solid surface. Get the right people who can help you move up the learning curve faster.
SSM: What applications do you see growing in the future?
Owens: I think the greatest upside opportunities in the commercial market space are vertical applications. Solid surface provides some significant functional enhancements on walls. We see those opportunities increasing in the future, especially as customers become more aware. A great deal of education needs to take place with the architect and design community.
There are also opportunties in the OEM and ancillary segments. This includes transportation, such as RVs, marine and other transport; the federal government; military; and consumer durables, or housewares; it's a big space.